Air, Flight Attendants Agree on Contract (Update2)

03/01/2006

March 1 (Bloomberg)—Northwest Airlines Corp., which is seeking $1.4 billion in annual labor savings, reached an agreement with its flight-attendants union that will save the bankrupt company $195 million a year and avert a strike.

The accord is subject to approval by the union’s officers and a vote by members of Northwest’s Professional Flight Attendants Association. No vote date has been set. Andy Damis, a spokesman for the 9,700-member union, declined to give details of the agreement.

``It’s in the airline’s interest and it’s in the flight attendants’ interest to make concessions that everybody agrees to, rather than one side forcing it on the other,’’ said John Budd, a professor at the University of Minnesota’s Carlson School of Management.

Northwest, based in Eagan, Minnesota, sought Chapter 11 bankruptcy protection in September. It still must reach a labor agreement with its 5,700-member pilots union and said in a statement today that it’s negotiating with them. The pilots have threatened to strike if a bankruptcy court approves Northwest’s request to impose $358 million in wage and benefit cuts.

U.S. Bankruptcy Judge Allan Gropper could rule as early as today on Northwest’s request, after he twice extended deadlines in February by ordering the parties to continue negotiating.

Pilots

The company and the pilots are still talking and ``waiting to hear from the judge,’’ said Will Holman, a spokesman for the Northwest Air Line Pilots Association. The pilots and Northwest were required to give their most recent bargaining position to the judge earlier today.

The two sides have reached general agreement on the airline’s operation of smaller jets, Holman said. That issue was earlier one of the biggest sticking points in the talks.

Members of the airline’s largest union, the International Association of Machinists, are voting on a contract that would reduce their annual pay and benefits by $190 million. The union has 14,500 members, including bag handlers and customer-service agents.

The flight attendants union said last month that during negotiations Northwest dropped a proposal to hire more non-union, foreign flight attendants. At one point, the company sought to hire 800 such workers for international flights, the union said.

If the attendants vote to reject the proposed contract, the bankruptcy court could still rule on Northwest’s request to scrap their contract and the union may still seek to strike.

``Ratification is not necessarily a forgone conclusion,’’ Budd said. ``At the same time, if the leadership is indicating it’s reached an agreement, and presumably Northwest has backed off some of the most Draconian proposals, then there’s some basis for selling this to the membership.’’